Surge Energy Inc. · TSX:SGY
Surge Energy — Investor Presentation (August 2021)
26 slides from Surge Energy's investor presentation, Aug 30, 2021
Slide 1: A Compelling Value Proposition
A COMPELLING VALUE PROPOSITION TSX: SGY August, 2021
Slide 2: Five Key Reasons to Own Surge
FIVE KEY REASONS TO OWN SURGE Surge has industry leading positive cash flow ‘torque’ to both rising oil prices and tight Canadian oil price differentials; as well as a very high quality, low cost, low risk, conventional crude oil asset base. 1. The Company has a proven management team with significa
Slide 3: Recent Developments
RECENT DEVELOPMENTS(1) Strategic, light oil, accretive acquisition in SE Saskatchewan ▪ Surge Energy has successfully completed the previously announced acquisition of Astra Oil Corp (“Astra”). ▪ The assets include more than 4,100 boepd (90% liquids) of high netback, light oil production, focused pr
Slide 4: Upwardly Revised 2021 Exit & 2022 Guidance
UPWARDLY REVISED 2021 EXIT & 2022 GUIDANCE Proforma guidance reveals strong ‘torque’ to WTI pricing US $WTI per bbl $65 WTI(1) $70 WTI(1) $75 WTI(1) Exit 2021(e) production 20,200 boepd (85% liquids) Average & exit 2022(e) 20,200 boepd (85% liquids) production 2022(e) Adjusted funds flow(2) $210 mil
Slide 5: Strategic Focus
STRATEGIC FOCUS Top-tier production efficiencies leading to sustainable asset development, strengthening of the balance sheet, and continued emphasis on ESG initiatives Disciplined Financial ESG Capital Positioning Initiatives Allocation Undertake low cost, high Focus on high return Continued focus
Slide 6: Environmental, Social, and Governance
ENVIRONMENTAL, SOCIAL, AND GOVERNACE Surge is committed to being a leader in ESG within the Canadian peer group ▪ The company continues to execute on its abandonment program and has abandoned >300 total inactive wells over the last year; ▪ Surge has received more than $14 million in funding through
Slide 7: Operations Focused in Core Areas
OPERATIONS FOCUSED IN 5 CORE AREAS Large OOIP pools in established conventional reservoir trends Greater Sawn: 93% Oil & NGL’s Average Valhalla: 85% Oil & NGL’s 65% Oil & NGL’s Sparky: 93% Oil & NGL’s SE Saskatchewan 90% Oil & NGL’s Minors: 50% Oil & NGL’s Shaunavon 100% Oil & NGL’s 7 FOOTNOTES INCL
Slide 8: Net OOIP of >2.5 Billion Barrels
NET OOIP OF >2.5 BILLION BARRELS Large OOIP, with low recovery factors - focused in conventional reservoirs SGY Net CTD(3) Total Booked Net Total Net drilling Estimated Oil Independent Recovery Core Area Formations Locations Avg. WI Net OOIP (1) Recovery Factor P+P (MMbbls) (Booked)(2) Factor (% OOI
Slide 9: Targeting Conventional Oil Reservoirs
TARGETING CONVENTIONAL OIL RESERVOIRS Surge focuses on high quality reservoirs at the conventional end of the permeability spectrum Recovery factors, internal rates of return (IRR), decline rate, and profit to investment ratio (PIR)(1) improve as reservoir quality improves. Ultimate Oil Recovery PIR
Slide 10: Sparky – Positioned for Continued Success
SPARKY – POSITIONED FOR CONTINUED SUCCESS Delivering sustainable production and cash flow growth Surge controls a dominant position in its core Sparky medium/light oil asset; the Sparky oil play is one of the top conventional crude oil growth plays in all of Canada, possessing: • >800 million barrel
Slide 11: Sparky: A Dominant Position
SPARKY: A DOMINANT POSITION Low on-stream costs, year-round access = a premier Canadian medium/light oil growth play ▪ The Sparky is a large, well established, oil producing AB SK formation in Western Canada. >11 Billion Barrel ▪ Surge holds a dominant land position in the medium / Trend light gravi
Slide 12: Strategic Re-entry into SE Saskatchewan
STRATEGIC RE-ENTRY INTO SE SASKATCHEWAN Adding high netback light oil production and reserves ▪ Surge has targeted SE Saskatchewan, by way of Astra, as a new, light oil, core area with the following benefits: • >120MMbbl’s of net OOIP in low risk, proven conventional reservoirs; and • ~4,100 boepd o
Slide 13: Southeast Saskatchewan – Asset Overview
SOUTHEAST SASKATCHEWAN – ASSET OVERVIEW High netback, low cost, conventional focused, light oil assets in the Williston Basin SK MB ▪ Operations in SE Saskatchewan & Manitoba • SE Sask ~3,300 boepd (82% Light Oil) • Manitoba ~700 boepd (99% Light Oil) Frobisher / Midale ▪ >120MM barrels of net OOIP
Slide 14: Valhalla – Stacked Pay Multi-Zone Potential
VALHALLA – STACKED PAY MULTI-ZONE POTENTIAL Multiple large OOIP light oil reservoirs provide a sustainable drilling inventory and production base ▪ ~200MMbbls of net combined OOIP. ▪ Doig and Montney turbidite wells among the most prolific oil producers in Western Canada. ▪ A previously drilled hori
Slide 15: Greater Sawn - Concentrated Light Oil
GREATER SAWN - CONCENTRATED LIGHT OIL >600 MMbbls net OOIP in concentrated Slave Point reservoirs ▪ Net OOIP of >600 MMbbls of light oil (35-42° API). Sawn OOIP: >200 MMbbl net ▪ Development inventory of 100 net locations Red Earth OOIP: >250 MMbbl net (62 net booked). ▪ Key Slave Point attributes:
Slide 16: Shaunavon
SHAUNAVON >400 MMbbl net OOIP on Surge lands in the stacked Upper and Lower Shaunavon formations ▪ Shaunavon produces 100% low decline medium gravity crude oil with high operating netbacks. ▪ Upper Shaunavon net OOIP is estimated to be >200MMbbl. • >65 net locations – (29 net booked). • 10 horizonta
Slide 17: Appendix
APPENDIX —S$GRGE ENERGY INC
Slide 18: Oil Hedging
OIL HEDGING Qtr. 3 2021 Qtr. 4 2021 Qtr. 1 2022 Qtr. 2 2022 Qtr. 3 2022 Qtr. 4 2022 Avg. Floor Price(1) $ 55.71 $ 57.50 $ 68.21 $76.06 $ 77.40 $ 76.84 (1) All USD-denominated WTI hedges have been converted to CAD at a rate of $0.79 USD/CAD in the above table. 18
Slide 19: Risk Management / Hedging
RISK MANAGEMENT / HEDGING The Company has an on-going, risk management / hedging program. Below is a list of Surge’s current WTI, WCS differential, and MSW differential hedges: WTI Crude Oil Derivative Contracts(1) WCS Oil Differential Hedges(1) MSW Oil Differential Hedges(1) (1) All USD-denominated
Slide 20: Risk Management / Hedging
RISK MANAGEMENT / HEDGING The Company has an on-going, risk management / hedging program. Below is a list of Surge’s current AECO & Chicago natural gas hedges and interest rate hedges(1): Chicago & AECO Natural Gas Hedges Interest Rate Hedge Notional Amount Surge Surge Type Term Fixed Rate Surge Pay
Slide 21: Analyst Coverage
ANALYST COVERAGE Financial Institution Analyst Email Address Acumen Capital Partners Trevor Reynolds treynolds@acumencapital.com BMO Capital Markets Ray Kwan ray.kwan@bmo.com Canaccord Genuity Anthony Petrucci apetrucci@canaccordgenuity.com Clarus Securities Inc. Robert Pare rpare@clarussecurities.c
Slide 22: Corporate Partners
CORPORATE PARTNERS Advisors National Bank of Canada ATB Financial Bank of Nova Scotia Bank of Montreal BDC Capital Lending Syndicate: Canadian Imperial Bank of Commerce Export Development Canada Goldman Sachs HSBC Bank Canada Toronto-Dominion Bank Auditor: KPMG LLP Legal Counsel: McCarthy Tétrault E
Slide 23: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “should”, “believe” and similar expressions are intended to identify forward-looking stat
Slide 24: Oil and Gas Advisories
OIL AND GAS ADVISORIES The term “boe” means barrel of oil equivalent on the basis of 1 boe to 6,000 cubic feet of natural gas. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 1 boe for 6,000 cubic feet of natural gas is based on an energy equivalency conversion me
Slide 25: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES Certain secondary financial measures in this presentation – namely, "adjusted funds flow", “free cash flow”, and “all-in payout ratio” are not prescribed by GAAP. These non-GAAP financial measures are included because management uses the information to analyze business pe
Slide 26: Additional Metrics
ADDITIONAL METRICS Additional Metrics This presentation contains additional metrics commonly used in the oil and natural gas industry. These terms have been calculated by Management and do not have a standardized meaning. Management uses these oil and gas metrics to further analyze the performance o